Power retailer Manila Electric Co. said Monday consolidated core net income dropped 14 percent in the first half to P10.6 billion from P12.3 billion a year ago, pulled down by a 7-percent decline in energy sales amid the coronavirus pandemic.
“While our first-half results provide some encouragement, uncertainty remains as the effects of COVID-19 continue to impact the nation. We are moving with caution but remain positive that a recovery is in the offing. While it is difficult to give a firm indication of 2020 performance, based on our outlook for the rest of the year, we expect our full year 2020 CCNI to be in the area of P21 billion,” Meralco chairman Manuel Pangilinan said.
Pangilinan said Meralco posted a consolidated core net income of P23.8 billion in 2019 and that “we will be down by about 10 percent, no more than 12 percent for the year vs. 2019.”
“Compared to other corporates, we’re not as badly hit as other corporates,” he said.
Meralco’s consolidated reported net income also fell 43 percent in the first half to P6.8 billion from P12 billion a year earier with the recognition of the company’s share in the impairment of an equity investment of P2.7 billion in the first quarter.
The company’s energy sales slowed down 7 percent in the six-month period to 21,139 gigawatt-hours from the same period in 2019, with only residential sales growing by 14 percent.
Commercial and industrial sales went down by 17 percent. Meralco said commercial volumes were expected to recover as more businesses were allowed to operate and restrictions of mobility were eased.
Industrial sales volumes are also expected to gradually rise, specifically among export-oriented companies, mainly semiconductor and electrical machinery.
“The three most consequential matters during this time are our people, keeping the lights on for our customers and helping our government respond to COVID-19. Profitability had to take a back seat. Despite various challenges, including lower cash inflows, delayed capital expenditures and the limitations resulting from the pandemic and lockdown, Meralco performed quite well. It was quick to respond to the outages during the ECQ and MECQ, ensuring that power is restored within or better than the service metrics,” Pangilinan said.
Gross revenues declined 14 percent to P142.3 billion from P165 billion in the same period last year on the combined effect of the 7-percent lower sales volume and lower pass-through generation charges as fuel prices remained low.
Meralco implemented total capital expenditure of P6.9 billion in the first half, down by 36 percent from a year ago, with the imposition of the enhanced community quarantine and limited resumption of projects and operations across all sectors during the general community quarantine.
“Meralco recognizes its critical role in enabling industries, and now more so, as businesses restart and transition to the new normal. Even while everyone faces uncertainty of an unknown future, the entire Meralco organization is committed to and will remain relentless in ensuring network reliability, customer care, and work place integrity,” Pangilinan said.
Meralco, as mandated by the Energy Regulatory Commission, extended the payment terms of its customers to four to six months covering their March to May billing. This increased its day sales in receivables to 47 days from 22 days pre-ECQ.
Total trade receivables of Meralco stood at P60.3 billion as of end-June, three times the balance pre-ECQ.
Operating expenses reached P13.8 billion in the first half, including aid to hospitals, local government units and other institutions with the pandemic of over P100 million and provision for bad debt of P1.4 billion.
“COVID-19 has disrupted and adversely affected industries, employment, operating procedures and our way of life. The pain brought by this global pandemic is expected to be felt for quite some time. Meralco has stepped up and increased its message handlers and, added digital and voice agents to address all customer concerns, while continuing to keep a robust and reliable network,” Meralco president Ray Espinosa said.
The Meralco board also approved the declaration of an interim cash dividend amounting to P4.697 a share to all shareholders of record as of Aug. 20, 2020 payable on Sept. 15, 2020.